Hong Kong Airlines considering cancelling A380 order

Hong Kong Airlines said it was considering cancelling a US$3.8 billion ($3.61 billion) order for 10 Airbus A380 superjumbos, which would deal a blow to the under-pressure European airplane maker.

"There are no firm decisions at this point. It will depend on how the business and the external environment evolves in the future," a Hong Kong Airlines spokesman told AFP.

Cancellation of the order would be a blow to Europe's Airbus and its parent company, EADS, following the discovery of cracks in the wings of several of the A380s.

EADS chief executive Tom Enders said last month he expected deliveries of A380s next year to be less than the 30 that the company had been anticipating as a result of airlines putting orders on hold while the crack issue is resolved.

The manufacturer also says it is being hurt by a row between Brussels and Beijing over a European carbon tax.

Airlines flying to, from or within the European Union are required to monitor CO2 emissions for entire journeys and, if necessary, pay for exceeding their carbon allowances.

China has blocked purchases of Airbus long-haul jets by Chinese companies in retaliation to the tax, EADS says.

Hong Kong Airlines, the third biggest carrier in the southern Chinese city based on passenger numbers, has recently cut long-haul flights to Moscow and announced the suspension of all-business class flights to London.

Executives say their strategy is to focus on short-haul regional routes between Hong Kong and other leisure destinations in Asia, including Thailand's Phuket, China's Sanya and Japan's Osaka.

The airline says it intends to replace older Boeing 737s in its fleet with new Airbus A320s as they become available.

The spokesman, who declined to give his name, said Hong Kong Airlines would eventually have an "all Airbus" fleet.

"This will provide cost efficiencies in service and management," he said.

The airline says it is considering either a share listing or a merger with mainland China-based sister carrier Hainan Airlines.

Hong Kong regulators last month ordered the airline to suspend its fleet expansion, limiting the types of aircraft it can operate until it meets safety requirements for large-fleet operators.